Monetary Authority of SingaporeThe Monetary Authority of Singapore (MAS) is partnering with R3, and a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using blockchain.

This project, which is seen as a rival to Swift’s network, will potentially create a payment system for participants to transact in different global markets round-the-clock.

Sopnendu Mohanty, chief fintech officer, MAS, says “having a single and coherent, distributed record of information makes blockchain an attractive solution for the financial sector”.

Big names are involved, as the consortium includes Bank of America Merrill Lynch, the Bank of Tokyo-Mitsubishi UFJ, Credit Suisse, DBS Bank, HSBC, JP Morgan, OCBC Bank, Singapore Exchange and United Overseas Bank. BCS Information Systems acts as a technology provider to the project.

The project will develop a pilot system in which blockchain is used to issue and transfer funds among participants. Such a system will “also be more resilient against stoppages by decentralising and distributing the software that records and validates payments”.

UPDATE 9 March 2017

Today (9 March), MAS announced the successful conclusion of the project.

MAS says it achieved the objectives of producing a digital representation of the Singapore dollar for interbank settlement, testing methods of connecting bank systems to a distributed ledger technology (DLT), and making the MAS Electronic Payment System (MEPS+) interoperate with the DLT for automated collateral management.

The consortium has commissioned Deloitte to produce a report that covers the aspects of DLT that are most suited to settlement systems and details the design principles used for the prototype. The report will “be made available soon”.

MAS has plans for two spin-off projects. The first, driven by the Singapore Exchange (SGX), focuses on making the fixed income securities trading and settlement cycle “more efficient” through DLT. The second project focuses on new methods to conduct cross-border payments using central bank digital currency.

MAS is in the early stages of discussions to develop links from Singapore to other countries using DLT to allow cross-border payments to settle directly using central bank accounts.